Adam Smith and Confucius: A Tour D'Horizon Towards a Transcultural Foundation of Institutions
Frankfurt School of Finance and Management
February 27, 2007
Fudan Journal of the Humanities and Social Sciences, Vol. 3, No. 3, pp. 91-126, 2010
Recently, economists have re-discovered the fact of the cultural embeddedness of institutions. This raises the question whether there are transcultural universals of institutions and institutional design. The paper proposes that such universals cannot possibly be empirical givens, but have to be continuously created through transcultural discourse. I take a first step by putting family resemblances in the moral and social philosophy of Adam Smith and the Conficians into the context of the evolution of Western culture and economics. The tour d'horizon starts with the thesis that the biased perception of Smith (neglecting the moral philosopher) in economics mirrors its cultural embeddedness into what sociologist Norbert Elias has called the homo clausus construct in Western societies. I continue with a survey of most recent research in behavioral, institutional, and evolutionary economics which clearly prove the fallacies of the homo clausus assumptions of individual autonomy. This explains the recent revival of interest in the Theory of Moral Sentiments on part of economists. Indeed, many Smithian insights can be supported by the recent advances in economic research. One fascinating implication is that opening up a transcultural discourse between Western and Eastern moral philosophy might show the way towards a transcultural foundation of institutions. A number of family resemblances between Smith and Confucius are presented. I conclude by highlighting some contentious issues between China and the West in the global economy, where the transition to a moral economy with Smithian and Confucian foundations might help to find workable solutions.
Number of Pages in PDF File: 27
Keywords: Adam Smith, Theory of Moral Sentiments, behavioral and experimental economics, institutional convergence in the global economy, cultural embeddedness of economics, Confucianism
JEL Classification: A13, B00, B31, Z10Accepted Paper Series
Date posted: February 28, 2007 ; Last revised: November 13, 2011
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